Business

(NEW YORK) — The holiday meltdown at Southwest Airlines last month cost the company as much as $825 million in lost revenue and added expenses, the company said in a government filing on Friday.

Southwest Airlines, the largest domestic airline in the U.S., canceled more than 16,000 flights over an 11-day period at the end of December, the filing said.

The disarray amid a massive snowstorm stranded droves of customers during a peak travel season, prompting the company to apologize and offer reimbursement for inconvenienced travelers.

“The cost is definitely a significant amount,” Ross Feinstein, industry veteran and former director of operations communications at American Airlines, told ABC News.

“I’m not surprised that this is the hit they will ultimately take, in terms of the sheer number of passengers affected and the number of flights canceled,” added Feinstein.

Roughly half of the cost stemmed from lost sales, the company said.

The remaining cost went to reimbursements for affected passengers, as well as frequent-flier points offered as a “gesture of goodwill” and extra compensation for workers, the company said.

Southwest Airlines this week announced that it would provide each affected passenger with 25,000 frequent flier points, which the company equated to about a $300 value.

If an airline cancels a flight, meanwhile, a customer is entitled to a full refund by law, according to the Department of Transportation.

In addition, Southwest Airlines vowed to “honor reasonable requests for reimbursement for meals, hotel, and alternate transportation,” the company said.

Last week, in an exclusive interview with ABC News’ Good Morning America, Southwest Airlines CEO Bob Jordan apologized for the debacle.

“There’s just no way almost to apologize enough because we love our customers, we love our people and really impacted their plans,” Jordan said. “There will be a lot of lessons learned that come out of this.”

In October, Southwest Airlines predicted strong financial performance over the final three months of 2022, estimating an increase in operating revenue of as much as 17% compared with the same period in 2019.

The holiday meltdown appears to have scuttled those aspirations. Compared with the same period two years prior, the company now estimates a 6% decline in carrying capacity, which measures the total number of passengers transported over a combined number of miles, the filing said.

Despite the news of the company’s financial blow, the price of Southwest Airlines shares inched upward in early trading on Friday.

Since the beginning of the debacle, on Dec. 21, Southwest Airlines stock has fallen about 6%.

All in all, the company will likely overcome the blow to its reputation, said Feinstein.

“If Southwest fixes this issue so that it doesn’t happen again, future passengers will forget and move on,” he said. “When they’re buying a flight, passengers typically book on price and schedule.”

The historic scale of cancellations at Southwest sprang from the company’s uniquely complex flight coordination model and its antiquated internal scheduling systems, flight experts, Southwest Airlines officials and union leaders previously told ABC News.

The announced cost of the meltdown does not include potential remedies for such issues, Feinstein said. The company will likely take on the added cost of updating its internal programming system to avoid another possible wave of cancellations, he added.

“There will be additional money spent and programmed for IT infrastructure,” he said. “That’s important before any other project – to make sure this doesn’t happen again.”

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(NEW YORK) — Peloton has agreed to pay a $19 million fine as part of a settlement over its treadmill recall, the U.S. Consumer Product Safety Commission announced Thursday.

The fitness company recalled its Tread+ and Tread treadmills in May 2021 following reports of more than a dozen injuries and the death of a child.

The settlement with the federal regulatory agency resolves the charge that “Peloton knowingly failed to immediately report to CPSC, as required by law, that its Tread+ treadmill contained a defect that could create a substantial product hazard and created an unreasonable risk of serious injury to consumers,” CPSC said in a statement.

CPSC said Peloton started receiving reports of incidents and injuries with the treadmills, including entrapment in the rear, as early as December 2018 though did not immediately report to the commission.

By the time the company did file a report with CPSC, there were more than 150 reports of people, pets and objects being pulled under the rear of the Tread+ treadmill, as well as 13 injuries ranging from broken bones to friction burns, according to CPSC. A 6-year-old child also died on March 3, 2021, after being pulled under the rear of the Tread+ treadmill, CPSC said.

The penalty also settles the charge that Peloton “knowingly distributed” 38 recalled Tread+ treadmills through Peloton personnel and third-party delivery firms from May to August of 2021, in violation of the Consumer Product Safety Act, CPSC said.

CPSC accepted the $19,065,000 settlement agreement by a 4-0 vote late last month, subject to public comment, marking one of the largest civil penalties in its history, commissioners said.

“By acting with one voice, the CPSC sends a loud and clear warning to companies who continue to sell dangerous products that they know can cause serious injury or death,” Commission Chair Alexander Hoehn-Saric said in a statement. “By failing to report these incidents to the Commission immediately, Peloton not only violated the Consumer Product Safety Act, but also consumers’ trust.”

Peloton said it was “pleased” to have reached the settlement agreement.

“Peloton remains deeply committed to the safety and well-being of our Members and to the continuous improvement of our products,” the company said in a statement, adding that it looks forward to “working cooperatively with the CPSC to further enhance Member safety.”

Peloton is currently pursuing the commission’s approval of a Tread+ rear guard that would “further augment its safety features,” the company said.

As part of the settlement agreement, Peloton must also maintain an “enhanced compliance program” regarding the Consumer Product Safety Act and filed annual reports regarding this program for five years, CPSC said.

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(NEW YORK) — The former chief executive of the cryptocurrency lending platform Celsius Network defrauded hundreds of thousands of investors out of hundreds of millions of dollars’ worth of cryptocurrency, New York Attorney General Letitia James alleged in a new lawsuit filed Thursday.

Alex Mashinsky lied to investors, concealed Celsius’ dire financial condition and failed to register as required by state law, the lawsuit said.

As Celsius lost some $440 million in risky investments, Mashinsky concealed the platform’s rapidly deteriorating financial condition, according to the lawsuit, which seeks to ban him from doing business in New York and requires him to pay damages, restitution and disgorgement.

“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” James said in a statement accompanying an announcement of the lawsuit.

Celsius is a cryptocurrency lending platform where investors could deposit their cryptocurrency in return for receiving yield on their deposited assets. Throughout Mashinsky’s tenure as CEO he made numerous false and deceptive statements about Celsius’ safety, number of users, and investment strategies to recruit investors, the lawsuit said.

In hundreds of public appearances, videos, interviews, blog posts and livestreams, Mashinsky asserted that Celsius was safer than a bank, though the attorney general’s office noted banks are highly regulated by state and federal agencies and subject to regular and robust examinations. Celsius was not and its customers had no hope of receiving the same protections as banks.

According to the lawsuit, Mashinsky repeatedly claimed that Celsius made safe, low-risk investments and only lent assets to credible and reputable entities. However, investors’ assets were routinely exposed to high-risk counterparties and strategies, many of which resulted in losses which Mashinsky concealed from investors.

The collapse of Celsius has left many individuals in financial ruin. The lawsuit mentioned a New York resident who mortgaged two properties to invest with Celsius. A disabled veteran lost his investment of $36,000, which had taken him nearly a decade to save up. Another disabled citizen, who depended upon government assistance to supplement his $8 per hour income, lost his entire investment.

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(NEW YORK) — Hundreds of Uber drivers in New York City are carrying out a day-long strike on Thursday after a lawsuit from the rideshare company temporarily blocked a pay increase set to take effect last month.

Striking drivers were set to hold a rally at the Manhattan headquarters of Uber, demanding the company drop its legal challenge and allow the pay increase to go forward.

A new rule from the Taxi and Limousine Commission, a city agency, would significantly raise minimum compensation for rideshare drivers, hiking pay by more than 7% per minute and 23% per mile.

The pay bump will yield a typical rideshare driver an additional $1,000 each month, said the New York Taxi Workers Alliance, or NYTWA, a labor group that organized the strike.

Samassa Tidiane, who has driven for Uber since 2014, said he is participating in the strike on Thursday because the need for a pay increase has become especially urgent amid near-historic inflation.

“This week, I was in the supermarket and a packet of a dozen eggs cost $8.49. Before, it was less than $2,” he told ABC News. “If our pay doesn’t go up, how are we supposed to survive?”

Tidiane said he typically works 12 or 13 hours each day, taking home up to $1,000 per week. But expenses like gas and car repair cut significantly into the earnings. He said Uber doesn’t cover such costs.

“Uber doesn’t give us one penny,” Tidiane said. “They treat us like garbage.”

The pay increase was set to take hold last month but a Manhattan judge suspended implementation days before, after a legal bid from Uber.

In its lawsuit, Uber objected to the new rule as “arbitrary and capricious,” saying it departs from the city agency’s previous decisions and relies on a faulty methodology.

In a statement, Uber said it expected few drivers to participate in the protest on Thursday.

“Every time the taxi association calls for a strike, drivers demonstrate they’re more interested in delivering for New Yorkers than social media discourse,” the company said. “We expect this time will be no different.”

The action from Uber drivers marks the second single-day strike carried out in protest of the delayed implementation of the city’s pay raise.

The first strike, on Dec. 19, prompted thousands of rideshare drivers to log off, forcing companies to institute surge pricing, NYTWA said.

Uber downplayed the effect of the first strike, saying that on that day the company recorded 8% more trips and 7% more drivers than an average Monday over the last three months of the previous year.

The next court date in the case over the pay increase is set for Jan. 31.

If the pay raise remains stalled in court, drivers may take part in a future strike lasting as long as two weeks, Tidiane said.

“If they do nothing today, we’re going to prepare a next step,” he said.

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(NEW YORK) — Shares of Tesla plummeted 12% on Tuesday, wiping nearly $50 billion from the company’s value and eliciting scrutiny of CEO Elon Musk as he appears to focus on Twitter.

The losses exacerbated a skid that goes back months. Since Musk acquired Twitter in late October, Tesla stock has fallen by half. Since last January, when Musk began investing in Twitter, the company has lost nearly three-quarters of its value.

In early trading on Wednesday, Tesla stock jumped about 3%, recovering some of the losses.

The precipitous drop this week followed a disappointing sales report for the last three months of 2022, which fell short of Wall Street expectations. Tesla delivered 405,000 vehicles from October through December; analysts anticipated 420,000 deliveries.

In all, Tesla sold a total of 1.3 million cars last year, which marked a 40% increase from the year prior. The figure fell short of Tesla’s stated goal of 50% annual sales growth.

The latest blow deepened some concerns that already hung over the automaker. Tesla faces falling demand amid recession fears and interest rate hikes, heightened competition and pandemic-induced production challenges.

Further, some analysts and major investors have sharply criticized Musk over a perceived lack of focus on Tesla, saying the company needs leadership as it contends with an adverse business environment.

“We all know Tesla management needs to be 100% focused at the moment,” Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, tweeted on Tuesday.

Gary Black, the managing director of investment firm the Future Fund, said on Monday in response to the company’s latest report on sales: “No way to sugar coat this.”

Tesla and Elon Musk did not immediately respond to ABC News’ request for comment.

Previously, Musk has attributed the falling stock price to rising interest rates, which typically benefits savers who stand to gain from an uptick in the interest yielded by accounts held at banks.

“As bank savings account interest rates, which are guaranteed, start to approach stock market returns, which are not guaranteed, people will increasingly move their money out of stocks into cash, thus causing stocks to drop,” Musk said last month in response to concern from a prominent Tesla investor.

Musk said late last month that he will resign as head of Twitter when the company identifies a successor.

The world’s richest person has sold nearly $40 billion worth of Tesla stock since late last year, including a $3.6 billion sale as recently as last week.

The sales have reduced the stake Musk holds in Tesla, raising questions about his continued level of involvement with the company.

Since he acquired Twitter, Musk has made dramatic changes. He fired top executives and cut the company’s 7,500-person workforce in half, while reinstating some formerly suspended accounts.

For his part, Musk has defended his actions at Twitter as part of an aggressive effort to rescue the company from financial peril, which he described in a Twitter Spaces interview in December as an “emergency fire drill.”

“That’s the reason for my actions,” he added. “They may seem sometimes spurious or odd or whatever.”

In an interview last month, Musk vowed to stop selling Tesla stock until at least 2024, though he has previously violated commitments to halt sales of the stock. He insisted that he hasn’t missed “a single important Tesla meeting” since acquiring Twitter.

Tesla remains the top seller of EVs in the U.S. but its lead has slipped in recent months as competitors offer a host of affordable alternatives, a S&P Global Mobility report showed in November.

The company held a 65% market share of newly registered electric vehicles in the U.S. through the third quarter 2022, a drop from 71% in 2021 and 79% in 2020, the report found.

Responding to weakened demand, Tesla announced in December that it would offer $7,500 discounts on Model 3 and Model Y vehicles delivered in the U.S. that month.

In a tweet on Tuesday, Musk appeared to acknowledge how his fortunes had changed: “12 months ago, I was Person of the Year,” he said.

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(NEW YORK) — Eating with the seasons is a great way to consume produce at peak freshness when it’s full of both nutrients and flavor. Plus, it supports local and regional growers.

Winter dishes and cozy recipes call for things like braised beans, stews full of carrots, onions and potatoes or even roasted squash, which are all at their peak this time of year.

From January through March, here’s a snapshot of what’s in season this winter:

(Make sure to check your local farmer’s markets or seasonal growing calendar because produce availability can differ by location based on harvest and yield.)

• Avocado (January, February, March)
• Beans, shell (January, February, March)
• Beets (January, February)
• Broccoli (January, February, March)
• Brussels sprouts (January, February, March)
• Cabbage (January, February, March)
• Carrots (January, February, March)
• Celery (January, February, March)
• Chard (January, February, March)
• Mushrooms (January, February, March)
• Onions (January, February, March)
• Parsnips (January, February, March)
• Potatoes (January, February, March)
• Shallots (January)
• Squash, winter (January, February)
• Turnips (January, February)
• Apples (January, February, March)
• Apricots (March)
• Pears (January, February)

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(NEW YORK) — Disgraced crypto executive Sam Bankman-Fried pleaded not guilty to federal criminal charges in Manhattan on Tuesday and was tentatively scheduled to stand trial Oct. 2.

Bankman-Fried, instantly recognizable by his mop of unkempt hair, appeared before Judge Lewis Kaplan in a dark suit and tie. His mother sat behind him in the spectator benches.

The former CEO of bankrupt crypto exchange FTX did not speak during the hearing. His attorney, Mark Cohen, entered the not guilty plea on his behalf.

“He pleads not guilty to all counts,” Cohen said.

Bankman-Fried has been charged with eight counts of fraud and conspiracy. Federal prosecutors have alleged Bankman-Fried orchestrated one of the “biggest financial frauds in American history” by steering billions in FTX customer and investor money and funneling it to his privately controlled hedge fund Alameda Research.

Other funds were used to buy lavish real estate and to make tens of millions in political donations, court records said.

The number of victims of the FTX fraud could exceed 1 million, a prosecutor said during Tuesday’s hearing.

“FTX was the second-largest crypto exchange,” the prosecutor, Danielle Sassoon, said.

Before his arrest last month, Bankman-Fried insisted in numerous interviews, including one with ABC News, that he did not know about any improper use of funds from customers of now-bankrupt crypto exchange FTX.

Bankman-Fried has been free on bond and subject to electronic monitoring while living at his parents’ home in Palo Alto, California. The judge added a condition of release that prevents Bankman-Fried from accessing or transferring assets from FTX or Alameda Research.

Reflecting the complexity of the case, federal prosecutors announced Tuesday they were bringing additional resources to bear in an attempt to track down stolen billions that disappeared from FTX.

Bankman-Fried was extradited from the Bahamas, where he lived in a multimillion-dollar mansion, on Dec. 21.

Two of his former colleagues, Caroline Ellison and Gary Wang, have pleaded guilty and agreed to cooperate with prosecutors

“We prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties. I also understood that FTX had not disclosed to FTX’s equity investors that Alameda could borrow a potentially unlimited amount from FTX, thereby putting customer assets at risk,” Ellison said during her closed-door plea hearing last month, according to a transcript obtained by ABC News.

Ellison, former CEO of Alameda and girlfriend of Bankman-Fried, pleaded guilty to seven counts. Wang, co-founder of FTX with Bankman-Fried, pleaded guilty to to four counts.

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(NEW YORK) — The first Mega Millions game of the new year is among its largest, with an estimated $785 million jackpot ahead of Tuesday night’s drawing.

It’s the fourth-largest jackpot in the lottery game’s 20-plus-year history and the sixth-largest jackpot in U.S. history.

The estimated $785 million prize can be paid with annual checks over 29 years or in a lump cash sum for an estimated $395 million.

The Mega Millions jackpot has continued to balloon over the past two-and-a-half months, with 22 drawings since the jackpot was last won on Oct. 14.

“On only three previous occasions has the Mega Millions jackpot gone beyond $700 million, and all three times those rolls continued on past $1 billion,” Mega Millions said.

The most recent time was in July, when an anonymous ticket owner in Des Plaines, Illinois, won a historic $1.34 billion prize.

The Mega Millions jackpot is the largest since a single ticket in California won a historic $2.04 billion Powerball jackpot on Nov. 8. A winner has yet to be announced.

The odds of winning the Mega Millions’ top prize are 1 in 302.6 million.

Mega Millions is played in 45 states plus Washington, D.C., and the U.S. Virgin Islands.

The next drawing is Tuesday at 11 p.m. ET.

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(NEW YORK) — Nearly half of U.S. states raised their minimum wages at the outset of 2023, helping millions of workers contend with the nation’s ongoing bout of high inflation.

In all, 23 states raised their wage floors at the start of this year in keeping with inflation-adjusted increases or as part of scheduled hikes that take effect at the beginning of each calendar year.

The pay increases affect about 8.4 million workers, who will gain a combined $5 billion over the course of 2023, the left-leaning Economic Policy Institute found.

After the wave of wage hikes, Washington became the state with the highest minimum wage, offering workers $15.74 per hour. Meanwhile, workers in Massachusetts and the New York City area saw their minimum base pay rise to $15 per hour.

In California, the state with the most workers affected by a pay increase, more than 3 million employees will benefit, the Economic Policy Institute found. That group of workers makes up nearly 20% of the state’s workforce.

Thirteen states raised their minimum wage to adjust for inflation that reached a 40-year high in 2022, including blue states like Massachusetts and red states like Nebraska.

Overall, the states that raised the minimum wage in recent days include: Arizona, California, Colorado, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Rhode Island, South Dakota, Vermont and Washington.

In addition, 27 cities and counties raised their minimum wage at the outset of this year, stretching from San Diego, California, to Portland, Maine. The city with the highest minimum wage, SeaTac, Washington, raised its base pay to $19.06.

The latest round of pay increases, however, will not affect any of the 20 states concentrated in the South that lack a minimum wage or offer a minimum wage that does not exceed the federal minimum of $7.25 per hour.

The last federal minimum wage hike took place in 2009, when Congress raised the pay floor to its current level. When adjusted for inflation, the federal minimum wage last summer reached its lowest level since 1956, the Economic Policy Institute found.

The nationwide push for minimum wage hikes intensified in 2012, when fast food workers launched a campaign called Fight for $15, aiming to raise wages and unionize the fast food sector. The Service Employees International Union, or SEIU, one of the nation’s largest labor organizations, spent tens of millions of dollars in support of the effort.

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(NEW YORK) — Disgraced crypto executive Sam Bankman-Fried is likely to plead not guilty to an eight-count fraud and conspiracy indictment when he appears in Manhattan federal court Tuesday, a person familiar with the matter told ABC News.

Federal prosecutors have alleged Bankman-Fried orchestrated one of the “biggest financial frauds in American history” by steering billions in FTX customer and investor money and funneling it to his privately controlled hedge fund Alameda Research. Other funds were used to buy lavish real estate and to make tens of millions in political donations, court records said.

Before his arrest last month, Bankman-Fried insisted in numerous interviews, including one with ABC News, that he did not know about any improper use of funds from customers of now-bankrupt crypto exchange FTX.

Bankman-Fried has been free on bond and subject to electronic monitoring while living at his parents’ home in Palo Alto, California.

Two of his former colleagues, Caroline Ellison and Gary Wang, have pleaded guilty and agreed to cooperate with prosecutors.

“We prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties. I also understood that FTX had not disclosed to FTX’s equity investors that Alameda could borrow a potentially unlimited amount from FTX, thereby putting customer assets at risk,” Ellison said during her closed-door plea hearing last month, according to a transcript obtained by ABC News.

Ellison, former chief of Alameda and an ex-girlfriend of Bankman-Fried, pleaded guilty to seven counts. Wang, cofounder of FTX with Bankman-Fried, pleaded guilty to to four counts.

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